NEW YORK (TheStreet) -- Family Dollar (FDO) doesn't want Carl Icahn to marry it off into a larger family without ample time to consider the union.

The small store chain adopted a shareholder rights plan Sunday that could deter an acquisition. Management undertook the measure two days after activist investor Carl Icahn revealed a 9.4% stake in the company and said he wanted to encourage Family Dollar to explore strategic alternatives.

Family Dollar fighting back against Icahn. $FDO adopting a shareholder right plan ... aka poison pill. This should be fun.

According to the SEC filing, the company gave each shareholder a "right" to purchase a unit of one one-thousandth a share of Series A Junior Participating Preferred Stock, par value $1.00 per share, at a purchase price of $300 per unit. In the event that Family Dollar engages in merger or other business combination in which Family Dollar does not survive as a separate entity, each rights holder has the right to receive common stock of the acquiring company having a value equal to two times the price of the right. The rights are triggered when a shareholder acquires more than 10% of the company and expire on June 8, 2015.

"The rights plan will help the Board protect shareholders against any person or group gaining control of the Company by open market accumulation or otherwise without paying a control premium for all shares," Family Dollar said in a Monday press release. The company said that the plan "is not designed to prevent an offer to acquire the Company, but rather to allow the Board adequate time to consider any and all alternatives."

The company said on Friday that it "welcomes input" on how it can enhance value in response to news or Icahn's stake.

Family Dollar has seen sales decline as competing dollar stores such as Dollar General (DG) and Dollar Tree (DLTR) have seen sales increase. Family Dollar sales fell to $2.7 billion in the second quarter, according to its April earnings report. The number was $200 million lower than the same period a year ago. Earnings dropped to 80 cents vs. $1.21 per share in the second quarter of 2013.

In response to the results, the company announced that it would lower prices on 1,000 basic items, close 370 underperforming stores and reduce its workforce. Family Dollar shares are down more than 8% since the beginning of the year.

Despite the shareholder rights plan, most investors bet that Family Dollar would ultimately be acquired. The stock rose more than 15% in early trading Monday morning to around $68 per share. A Credit Suisse analyst said in a February note to investors that Walmart (WMT) should acquire the company.

Walmart is looking to attract the small store "fill in" business -- a.k.a. customers who go shopping to grab, say, laundry detergent or other small items at the corner store. Family Dollar is well positioned geographically to help Walmart jumpstart its small store business, according to the note. The analyst estimated that Walmart could pay between $76 to $82 for the company.

Jefferies upgraded the stock to a buy with a $79 price target Monday. The former target was $55. Morgan Stanley released a note with the same price target Monday.

Jefferies analyst Daniel Binder also upgraded Dollar General to a buy on the premise that it could purchase Family Dollar and improve its competitive position. Binder said a merger between Family Dollar and Dollar General would create between $950 million and $1.2 billion in synergies. In his note, Binder said the upgrade is based on "a potential combination of Dollar General and Family Dollar and the enormous synergies we see as a result."

Family Dollar is far less interesting, he said, as a standalone company and is fairly valued at around $60 per share.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.